Case Law Details
Prodair Air Products India Private Limited Vs State of Kerala (Kerala High Court)
Kerala High Court held that order passed rejecting claim of input tax credit (ITC) on purchase of capital goods without giving reasons for rejecting the same is unjustified and unsustainable.
Facts- The appellant is a private limited company involved in the activity of production and sale of industrial gases such as Hydrogen, Nitrogen and HP Steam. It is a wholly-owned subsidiary company of Air Products and Chemicals Inc., USA. It was also a registered dealer under the Kerala Value Added Tax Act (KVAT Act).
It was stated that to implement its Integrated Refinery Expansion Project, Bharath Petroleum Corporation Limited [BPCL] found it necessary to ensure a continuous and reliable supply of Hydrogen, Nitrogen and HP Steam of particular specifications to increase the production of their petroleum products. They accordingly published a notification inviting bids for the supply of these gases. The appellant responded to the said notification and was eventually awarded the contract.
According to the appellant, its obligations under the contract were to Build, Own, Operate (BOO) and maintain a Hydrogen and Nitrogen manufacturing plant at its own cost and expenditure on the land to be allocated by BPCL on a lease basis, to ensure exclusive and uninterrupted supply of Hydrogen, Nitrogen and HP Steam to BPCL at competitive prices. In the agreement between the parties, the price of the gases is fixed in terms of a formula specified in Article 15 thereof, which comprises Fixed Monthly Charges as well as Variable Charges. The Fixed Monthly Charges consist of a fixed amount towards return on the investment of the appellant, a component towards maintenance costs and other overheads, as well as manpower costs. The variable charges, on the other hand, comprise the variable costs of producing industrial gases. Although separate invoices are raised for the Fixed Charges and Variable Charges, they together go to make up the price for the supply of the industrial gases under the agreement.
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